The ICT Optimist

Its been a busy week for the convergence of IT and telecoms. Specifically two interesting changes have occurred that seem to validate the view that the IT companies are getting much more serious about absorbing or at least offering more telecoms capability within their portfolios.

The first event was IBM announcing that it is going to OEM the Foundry NetIron and Fastiron switches as IBM products. This is significant since IBM  exited the market of privately labeled networking gear quiet a long time ago by selling that division to Cisco. This exit was driven by their belief that they needed to go up market and focus on IT software and services. They did that pretty well but with Cisco, their former partner,  now moving into the IBM core markets with their Unified Computing offerings, it seems that the IBM reaction is now to need an internal IBM networking offering. Foundry is as good as any option short of an acquisition although one could see IBM making an acquisition of networking gear as the markets consolidate over the next few years.

The second event was less visible but equally interesting. HP announced that they had hired a senior EMC executive to run their newly combined storage, compute and networking division. EMC has now apparently sued the executive over this. Regardless, this new focus by HP on a vision where  “the future of computing moves toward converged platforms of servers, storage and networking” sounds very IT/Telecoms convergence affirming.  Clearly HP is also seeing the need to consolidate the vertical elements of IT and telecoms rather than simply partner for the horizontal layers. This could be driven by Cisco’s recent moves or by a reaction to IBM or even Microsoft activity but in any case it is yet another example of the profound changes in industry composition that are happening now.

Both of these events add to the other recent events from the big IT players that continue to show they are aligning to compete as vertically integrated “super IT/Telecoms” companies. The pace is picking up and it will be interesting to see how long it takes before one of these companies declares themselves the “one stop shop” for all things IT and Telecoms.

For the past few years it has been clear that the next phase of our industry would be a period of consolidation into larger and more vertically integrated companies. This is not a new phenomena in that if one looks back about 20 years ago the industry was composed of several huge vertically integrated IT/Telecoms companies. Wang, DEC, IBM, etc dominated the industry and their goal was to provide everything from networks to business applications and services. For the past 20 years though we have seen those huge companies disappear or transform and the industry morphed into a set of layered markets (data networking, voice networking, compute, applications and services) each with its own vendor community and leaders and innovators. Today we are beginning to see a shift that is somewhat “back to the future” as we see major IT and Telecoms companies attempt to re-converge the market and become similar to the large vertically integrated tech companies of the past. We have seen Cisco Systems acquire up market and move up the stack into compute and applications. We have seen HP purchase EDS, consolidating the services space, and assert the value of their procurve networking division, moving down the stack.  Today we see with the Oracle acquisition of Sun, a software and applications company extend down the stack into additional middle ware, operating systems and even compute hardware.

Some might describe this as a combination of two similar companies but if one looks at where they each play, its is clear that they are not at the same layer. Sun is about compute and foundational technology where Oracle is about middle ware and applications. They clearly have some overlap but their combination creates a significant expansion of the layers of the combined entity and affirms the theory that industry consolidation today is about vertical aggregation and expansion rather then simply horizontal market share consolidation.

So whats next? It is my belief that this consolidation will continue for years and the outcome will be an industry that resembles the ICT industry of  20 years ago much more than it resembles the industry in 2000. We will mostly likely end up with a number of very large companies that want to reach up and down the stack and offer complete ICT solutions to their customers rather than having to rely on large complex partnerships. As these companies emerge and grow, their former partnerships will become complex and difficult to maintain as they become more competitive with each other. As they compete, they will fight to “out scale” and “out-solution” one another. We will see more of the “one stop shopping” mantra emerge and end customers will generally have the choice of picking one strategic partner or investing in their own integration between hostile ecosystems. This evolution will not be good for innovation or the industry as when the market moves to consolidation as a focus, it rarely spawns the innovation that naturally disrupts the status quo and creates that huge paradigm shift we thrive on in this industry (mainframe to desktop to internet as an example).

So is that the end state? Not at all. As we saw in the late 1980s and early 1990′s, inevitably as the complexity of IT and Telecoms technology expands and as the ultra large companies become to complex to maneuver, the industry shifts back to innovation. Generally speaking the dominate companies become terrific targets for new companies to attack and either improve on or disrupt with innovative alternative approaches to their mainstream technology. If you remember in the late 1980′s most networking start ups operated under the premise that they would develop technology that would improve on the systems that DEC and IBM had built. But because they where start ups they could do radical things that the established companies could not react to for fear of disruption. In once classic example, a company called Cabletron Systems, came up with a novel idea of putting LED diagnostics on the outside of networking hardware. They called it LANView, patented it, and offered products that competed functionally with products from places like DEC but with this LED enhancement. They went from a few guys in a garage to a $1.4B company in a very short period of time.  We have also seen companies like Netscape and Google disrupt the software market by being willing to deliver a better web interface or Internet model where the incumbent software companies defended their legacy.

My point in this blog is that our industry is cyclical but the cycles are long. If you look back 20-30 years you see striking similarity in the consolidation and positioning of companies today and if you believe that cycles repeat, it means that we have a few years of consolidation followed by a next phase of disruption of that consolidation via innovation. It should be interesting to see how that plays out and if the cycle does repeat but for now, more large vertical consolidation mergers like Sun and Oracle just affirm this theory.

I have been “officially” on twitter as theICTOptimist for a while now but over the past few months I, after installing a decent client (Twirl), I have started to actually use it and find some value. The funny thing is that I still don’t see a lot of value in posting my minute by minute thoughts or activities on it but have found that as a follower of a number of organizations and people, its has great value for me. A few early experienced that make it real for me:

• I did not physically attend voicecon a few weeks ago but in addition to the voicecon web site and various online news stories, following a few folks who where there using twitter really filled in the blanks. Specifically abnerg (Abner Germanow, an analyst who I have known on and off for a decade), kenkamp (Ken Camp, a digital media consultant who I don’t think I have ever met), DaveMichels (dave Michels, an “telecoms and VOIP enthusiast” who I also don’t think I have ever met), and the official Voicecon twitter feed, all filled in the blanks on what was really going on. While I probably could have gathered a lot of what was twittered over time, the complement to the real time video or news was great and made for a more complete experience.
• I added the twitter feeds from a few of my favorite blogs and news sites. Specifically GigaOM and theRegister. What I found was that not only do I get the updates in real time but for the first time I am following some of the commentary. I traditionally did not bother to look at the comments of these or many sites as they require additional clicks and for the most part are a waste of effort given some of the silly comments that people make. When comments flow via twitter, the zero effort part of viewing them means I am much more likely to see them and occasionally the commentary is interesting.
• My colleague April Dunford, attended a conference on social media in Toronto called MESH. I didn’t really know about it until last week and by then could not attend. By following her twitter feeds I got a good level of insight into that event  and since I trust here opinions when she tweeted that a session was interesting or some element connected to the event worth looking at I could click on the link and see what was going on.
• I have added the BBC to twitter now and while they generate a lot of posts, the ability to scan them as they happen makes reading news a lot simpler and real time.

All the above examples show that there seems to be value in Twitter, not as the primary medium but as a complement to information streams, sources or events. That may be it’s real value as opposed to trying to find unique stand alone value of the tool.

On the down side, a few things seem to be happening with twitter that are not positive. At MESH, there was an observation that when they allowed the audience (mostly a bunch of serious social media folks) to use twitter to submit questions, the in person interaction was seriously degraded. The speaker got a question over twitter and unlike when someone in the audience asks the question and you can see and judge their reaction (did they get it or do you need to elaborate), the speaker might as well have been responding to a email from the other side of the world. Face to face interaction is always a better medium than other options and using twitter to interact when you are ten feet from the other party creates a sub-par experience over what could have happened. A second negative is that using twitter is like learning to use  a UNIX machine. Everything is abbreviated and since the messages are 140 characters long some crazy twitter specific language is present that has a pretty steep learning curve. Once you figure it out its OK, but there is no way twitter vernacular is going main stream.

The punch line is that as a twitter skeptic, I am now much more favorable to using it as one of many tools and I have enough data to show that even if you don’t want to post your minute by minute activity, the act of following events, topics and even some people is pretty useful in filling the gaps of information. I would not recommend following me yet (but feel free to if you want) but if you have not tried it out, download twirl or some decent client (the web version stinks) and pick a few topics or people and just casually watch. You will find that you learn something and get a more enhanced feeling of the event because of the added twitter elements and the effort is pretty minimal.

Whats particularly interesting is that if a esoteric interface like twitter can be useful by providing personal feeds on topics, what will come next using a similar model with better interfaces, richer experience and similar simplicity. That could be very exciting.

Its interesting to watch the industry and see how leadership seems to be hard to find. In thinking about this I remember a great set of quotes from Warren Bennis on the difference between leaders and managers…

Warren Bennis (1989) on leaders versus managers

Manager versus Leader

The manager administers; the leader innovates.

The manager is a copy; the leader is an original.

The manager maintains; the leader develops.

The manager focuses on systems and structure; the leader focuses on people.

The manager relies on control; the leader inspires trust.

The manager has a short-range view; the leader has a long-range perspective.

The managers asks how and when; the leader asks what and why.

Managers have their eyes on the bottom line; leaders have their eyes on the horizon.

The manager imitates; the leader originates.

The manager accepts the status quo; the leader challenges it.

The manager is the classic good soldier; the leader is his own person.

The manager does things right; the leader does the right thing.

Warren Bennis

Consider the difference and look for examples of leadership and its pretty certain that where you find real leadership, those organizations will lead the recovery of both the economy and the ICT industry into a next era.